Confidence returns to the property market

Confidence is slowly returning to property markets across the country, with demand for quality properties still remaining high according to experts.

However, renters continue to face incredibly tough conditions in almost all capital cities around the country.

According to the latest PIPA National Market Update, there has been more activity from educated buyers and investors recently, despite a cash rate that many borrowers would have never experienced.

PIPA Chair Nicola McDougall said property prices appeared to be stabilising – partly due to the low volume of stock for sale.

“With inflation also appearing to have peaked, there are certainly plenty of signs that we are heading for more positive property conditions in the months ahead.” Ms McDougall said.

In Victoria, Buyers’ Agent and Qualified Property Investment Advisor, Cate Bakos said there was still strong demand for quality properties across the state.

“The Melbourne market can’t really be described as underperforming currently,” Ms Bakos said.

“The recent monthly data supports what we’re all feeling at the coal face; a two-speed market with heightened competition on quality properties and languishing listings for compromised listings. 

“Buyers remain disinterested in renovation and/or development projects and today’s buyers are applying high scrutiny to each listing in the quest to buy well, however, it’s becoming abundantly clear to these buyers that a low level of listings in the renovated house segment is underpinning the market firmly and contributing to price increases.”

Ms Bakos said record low vacancy rates were also having a huge impact in Melbourne.

“The dramatic impact of tight vacancy rates is hurting renters in Melbourne and our news feed often shows long lines of prospective renters queuing up hopelessly at open for inspections,” she said.

“Melbourne’s overall annual rental growth figure of 10.1 per cent is in line with national rental growth, however, Melbourne’s unit market has dramatically uplifted. 

“As bosses request their employees return to either full time or hybrid office work, our demand is skyrocketing for units in Melbourne. 

“The recent influx of Chinese students ordered to return to in-person study by the Chinese Government is exacerbating the already challenging conditions that renters are facing. 

“Lower new building starts, heightened interest costs for prospective investors, and challenging rental reforms are keeping rental stock levels subdued and amplifying these horrid conditions for renters.”

In Sydney, Chief Executive Officer and Founder, Property Buyer, Rich Harvey said he had seen a dramatic slowdown in price deceleration, and the market had reached a point of inflexion. 

“Some say we have reached the bottom of the market while others say there could a few more per cent to drop,” Mr Harvey said.

“At our regular open house inspections, we are seeing a resurgence in buyer numbers. 

“Since February, it seems the buyers have a newfound enthusiasm for searching for property.”

Mr Harvey said the rental market remained incredibly tight and rental prices would continue to rise over the coming year due to the chronic shortage of housing.

“Rental prices have shot through the roof which is motivating some renters to consider buying a property to get out of the perpetual rental cycle,” he said.

Founder and Director, EKR Property, Edward Reavy said supply still remains incredibly tight across Queensland.

“At recent open homes that we have been attending, we hear prospective buyers and renters commenting on the low stock levels,” Mr Reavy said.

“This illustrates that the demand for property continues to outstrip supply. 

“These simple supply and demand factors will help to keep Queensland house prices from falling off a cliff and further fuel higher rents.

“All roads are leading to increased pressure on the housing market in Queensland, which in turn leads to price and rental increases.”

Programs Director, Master of Property from The University of Adelaide, Peter Koulizos said Adelaide and South Australian property continued to go from strength to strength, relative to the rest of the nation.

“Adelaide and South Australian property have performed exceptionally well over the past two years,” Mr Koulizos said.

“How long will this last is anyone’s guess but it has been the biggest property boost in almost 20 years.”

Momentum Wealth, Managing Director, Damian Collins said Perth had not experienced the same contraction in prices as the other capital cities.

“WA remains relatively affordable due to its low housing prices, strong income, and labour market,” Mr Collins said.

“There is a significant undersupply of residential houses and rentals within the Perth market, which is expected to tighten as supply is unable to keep up with the growing demand of a rising population.”

Propertyology, Head of Research, Simon Pressley said buyers had gone missing in the Tasmanian market.

“A deep dive into lots of different data sets reveals that the current softening in the market is caused by an intangible phenomenon that we call “buyer fatigue” Mr Pressley said.

“The state, especially Hobart, has enjoyed one of the longest growth cycles that any Australian city has ever seen. 

“So, it is possible that buyers are now catching their breaths.” 

He said the timing of the market softening correlated with the start of this interest rate cycle in May 2022.

“Oversupply is not an issue, but what is listed for sale is taking longer to shift,” he said.

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.